Giving you back the control of your freight through a multi carrier dispatching freight system; enabling freedom of choice of carriers.
One of the major benefits of technological advancement is that it helps companies and individuals become more productive. This productive development allows companies to grow profitably, lifting our standard of living. Currently we are seeing a trend in our economy where companies are now using data analysis and management to continually improve outcomes and drive down costs.
New software networked over the internet allows specialist providers to develop highly sophisticated and targeted software solutions that were once only deployed by large companies with significant financial resources. The benefits of data management and analysis are now available in the area of freight and carrier management for medium to small sized companies.
Utilising an independent freight management software system offers companies the opportunity to capture and analyse their freight data and carriers performance more effectively than ever before. It’s now up to companies to take this opportunity and use it to continually improve.
The options available to companies today are:
Handwritten consignment notes:
- obviously slow
- prone to human error
- and quickly becomes unmanageable with higher levels of consignments per week
Transport carrier software technology:
- free of charge
- semi-automated system that provides improved cost efficiencies,
- limited to the one freight service provider and built around their needs, usually for outsourcing their accounting to your warehouse staff
Several transport carrier software systems:
- free of charge
- provides the ability to manually select between carriers (either warehouse staff choice or edict from executive team)
- limited to the constraints of training staff on several systems, setting up multiple printers, possibly different label types
- difficult to manage and not centralised for reporting and managing freight processes
An independent freight managemen software system:
- a fee involved
- provides automation
- rates freight and compares carriers for least cost carrier
- frees you up to make choices on adding carriers at will without repercussions of changing software systems
- provides you with all the freight data for your own analysis and allows for the integration of WMS/CRM systems for further automation
Multiple carriers
Some distributors appoint one carrier for their outbound freight requirements, but most look to have several carriers provide this service. Having several carriers can be a way of mitigating transport risk and lowering your outbound freight costs.
Having multiple carriers allows you to reduce the risks of exposure to one provider in case of a dispute, major service failure of risk of supplier financial collapse. Recently we have seen several carriers financially fail leaving their customers high and dry. By employing a multiple carrier strategy, distributors can use multiple services to satisfy their customers’ requirement for more expensive time critical deliveries, whilst also taking advantage of other carriers that use slower, but far lower cost general freight services for bulk goods.
This strategy also allows distributors to take advantage of niche carriers that often concentrate upon geographical specialisation. That is, use different carriers for different regions, freight types or service requirements. Some distributors will also use two directly competitive carriers thereby maximising competitive tension and cherry picking transport lanes based upon the price.
Carrier provided freight systems
Most distributors use carrier provided freight software, or web-based dispatch systems, because they are provided by their carrier either for free or for a small fee. For the reasons explained in the previous section, many distributors of domestic cargo find that it is more cost effective to use the services of several carriers.
This means that most companies end up with several software systems to dispatch their outbound freight. While this outcome may appear to be a low investment solution it is seldom the most cost effective approach.
A prime disadvantage of this approach is that staff need to be trained on multiple systems, and if you introduce a new carrier then the staff need to be trained again or end up making costly errors.
When you have several systems, it is more time consuming to go between the systems to choose the least cost, best service carrier for each consignment and to follow up customer queries on lost freight consignments. A centralized system will save a lot of time and money when you use can select the least cost carrier from your suite of carriers in a matter of seconds for every consignment.
Some companies avoid this cost and inconvenience of training and swapping between systems when entering consignment and tracking them, by limiting themselves to the one carrier which is the worst outcome, as it limits your ability to improve your carrier cost and service.
Integration limitations
Companies using several separate transport carrier systems also often limit themselves to standalone arrangements where consignments are created by manually typing the data into several carrier dispatcher systems. Integrating with several carrier systems is a costly endeavor that locks you in with the carrier(s), and for this reason is usually dismissed as an option, which means the distributor is limited to a manual process.
Using an independent multi carrier dispatch system allows companies to automatically import their consignment data directly out of their WMS or ERP systems straight into the dispatcher thereby eliminating double entry of data, and human error. If a distributor changes carriers, it takes just half an hour to be up and running with the new carrier without retraining and without getting IT staff of at least two companies to re-do the integration of the systems.
This automated method with a multi carrier system typically saves approximately 1 minute per order and for volume users this modification alone will pay for the independent system many times over.
In house systems
Some companies choose to go it alone and use their internal IT resources to develop a dispatch management system. The advantage of this approach for them is that they retain full control of the project and can deliver the level of outcomes that they want. In theory that maybe the case, but it doesn’t always work out that way.
While many companies do have the resources and ability to achieve this goal, often they can end up limiting their systems to just the most basic functions of a dispatcher. That is, enough to create and send data to their carrier, but they don’t always go the next step of developing management reports and tools to drive down their transport costs.
Due to the expense associated with setting up a dispatch system to comply with the many and varied requirements of different carriers, most companies that develop their own systems cater only to their current carrier(s). For the reasons discussed earlier this is a mistake and it often means that companies simply stay with their existing carriers, never moving and testing new suppliers.
It is impossible for a company to economically develop an in house system that will cater for various carriers (other than incumbent carriers) and as a result companies may miss out on opportunities for change and variability because it’s just too hard, or not timely enough to change their systems. It’s easier just to stay with what they have, which is often not a best practice approach to freight management.
Independent Freight Management Software
A multi carrier dispatch system becomes a Freight Management Software (FMS) system when it has the ability to create comprehensive management reports that detail how and where a company spends its money on transport.
Using this type of system, you should be able to tell:
- how much you spend on freight as a percentage of your sales;
- by carrier, cost centre, state, product, group etc.
- how much you can save by adding or changing carriers in a ‘what if’ analysis
and ensure that you always use the most cost effective carrier for a given level of delivery service, for every consignment
Some of the most advanced FMS systems can also:
- prepare reports showing the delivery on time rate by carrier or send alerts for overdue deliveries.
- reconcile your carrier invoices and even allow companies to reverse bill based upon POD status (carrier dependent).
A sophisticated freight management system should be an integral part of your customer profitability modeling. This modeling allows you to make informed and therefore better strategic and tactical decisions about how you service your customers.
Reporting options
Some vendors for Freight Management Software systems provide the option for you to outsource your freight reporting and services such as DIFOT reporting and Carrier Invoice Reconciliation. Many clients we speak with do not have the time or resources (or both) for properly managing these tasks.
For more information on the benefits of this option please read our previous article: Outsourcing the Management of your Freight Software and Reporting
Conclusion
While there are alternatives to an independent multi carrier dispatch or freight management system that may require lower levels of initial investment, these solutions may end up costing you more than an independent, third party solution. A specialist independent multi carrier dispatch system is a better and more comprehensive solution; a freight management software tool is more sophisticated again, these systems will promote proactive and comprehensive management of your carriers, as well as your transport expenditure.